Keeping Capitalism Messy in Malaysia
Jonathan Ortmans @jortmans
Nov 16, 2011
Malaysia transformed itself from a producer of raw materials in the 1970s into an upper-middle income country with a multi-sector economy by the late 1990s. The 1997 crisis significantly challenged this technology-exporting country, but it has since successfully sparked two main sources of economic resilience—foreign investment and new firm creation. To my surprise, Malaysian entrepreneurs I spoke with here gave a great deal of credit to, of all actors on the stage, their government. Did government really do something right?
While governments set the rules and incentives, those trying to build more robust rates of new firm formation in their countries do not generally hold out much hope for any silver bullets from their public sector. The high point of most government programs is too often the day they are announced by high profile political leaders in the bright lights with cameras rolling! Malaysian leaders seem to have taken a more iterative and somber approach to some specific interventions in a national culture that, as was explained to me on my first visit there, did not embrace risk-taking and entrepreneurship easily.
Over the past five years, progress is evident. Although not yet a startup economy, Malaysia’s entrepreneurialism is reflected in its entrepreneurship and innovation ranks: 34th out of 104 economies in the Legatum´s Entrepreneurship and Opportunity sub-index, 21st among 183 economies in the World Bank´s Doing Business rank, and according to leading advocates, nearly all universities now offer entrepreneurship as a subject. While entrepreneurship programs at universities around the world have mixed results, with 60% of the country’s population of 27 million people defined as youth, this is a step in the right direction.
But how much of this recent success has been driven by the public sector? Malaysia’s Prime Minister has put special emphasis on innovation and entrepreneurship as a central economic driver in the country’s ‘New Economic Model’ (NEM) - moving it closer to the heart of economic policy from the sidelines. And programs do abound. Government is now providing grants at the pre-seed and seed level, and introducing various policies to ease regulatory compliance for new businesses. As reported by the Mansfield Foundation, there are now plenty of supporting mechanisms for entrepreneurs in Malaysia, including physical infrastructure, business advisory services and access to capital. In fact, according to the World Bank, Malaysia is the top country in the ease of getting credit.
My visit this week to Kuala Lumpur has provided evidence of a new force at play here—Global Entrepreneurship Week / Malaysia of course. And what I saw was just a small part of GEW's impact and activities in Malaysia.
Yesterday, the Technopreneurs Association of Malaysia and Youth Entrepreneur Malaysia (YEM) invited me to join a very interesting dialogue with two dozen startups at the Plug and Play facilities. These young guys had little to learn from me. Not only were they asking the right questions, but they impressed me at how they were focused on the right priority – actually developing their product until they get it right. I walked away with a sense they were quietly getting on with it with little fanfare but with mounds of commitment. And they were not only technology entrepreneurs - one of the participants was responsible for this past weekend’s Malaysia’s Online Fashion Entrepreneurs’ Weekend 2011 (MOFEW) where online fashion entrepreneurs made their presence known offline. GEW in Malaysia has clearly been showcasing all kinds of entrepreneurs as role models for Malaysians, not just technology startups.
After the event at Plug and Play, I headed over to TEDxMerdekaSquare. Although it was past 11PM, I found an auditorium still at work talking and thinking about how to replicate and scale projects inspired by the esteemed Prof Dr. Anil Gupta’s talk about how poverty is the conscience of technology.
Our panel this morning with a new audience of entrepreneurs and support organizations focused on the strengths and weaknesses of Malaysia’s Startup Ecosystem relative to that in Singapore and the USA. This discussion reaffirmed my sense that we are seeing a global race to the top as nations probe the best and worst of different startup ecosystems around the world to find the right policies and programs to emulate. I do not see competition yet among those trying to weave together startup communities and the right messy support systems that enable them – but I predict this is fast approaching as more political leaders seek to attract the brightest and boldest startups to their shores. Nazrin Hassan, CEO of Cradle Fund Sdn Bhd, saw a need to encourage a culture of sharing in a nation where there has been a history of distrust in business affairs. He also challenged startups to keep “learning” as their first priority and to only worry about finance later.
Although one member of our panel, Dr. Chau Chun Dong, Head of Investments Research at Crystal Horse Investments came in from Singapore, there was less interest at this event in learning from Singapore successes. Some suggested that Singapore has done well with the visibility game, but that that does not do as well as Malaysia in terms of product development. Malaysia has always had a friendly rivalry with its entrepreneurial neighbor Singapore, which has a global reputation for welcoming bright minds from beyond their borders. Despite the views from folks on this panel, this country is clearly more open to looking to other models from around the world to advance its status as a place for startups than ever before.
And only last month, the country made a statement about its entrepreneurial “map” when it launched StartupMalaysia.org, the country’s first not-for-profit entrepreneurial initiative founded as part of GEW to catalyze, create and connect the next generation of high growth entrepreneurs in Malaysia with mentors and funders from overseas. Inspired by Startup America and similar initiatives in Chile and South Korea, the core elements of this initiative include global mentorship and business acceleration. The initiative was inaugurated with dozens of entrepreneurs from the United States visiting Kuala Lumpur.
Also while I was here today, the Kuala Lumpur Innovation Forum 2011 (KLIF) took place featuring participants such as: Dato’ Seri Idris Jala, Minister in the Prime Minister's Department; Anil Gupta, Deputy Chairman of the National Innovation Foundation of India; Ralph Kerle, CEO at The Creative Leadership Forum, Australia; Tony Buzan, Mind Maps founder; Timothy Stearns, professor and executive director, Lyles Center, University of California; and Azran Othman Rani, CEO, Air Asia X Sdn Bhd.
Looking ahead to tomorrow, Malaysian current and potential entrepreneurs in all industries and ages will have the chance to gain exposure at events like the "I'm A Technopreneur" workshop on November 19, targeted for kids 9 to 15. CultureRun’s Big Idea in turn offers an exciting brainstorming session with minds from an array of fields, from entrepreneurs to musicians, to investment bankers or filmmakers. CultureRun’s Big Idea is inspired by the idea of a community think-tank.
And the entrepreneurial fest does not end this week in Malaysia. If you want to navigate the startup ecosystem here, follow the Startup Adventure Race, coming up soon. This event promises to gather all the players in the entrepreneurship ecosystem, from aspiring and established entrepreneurs to angels and other investors. During this 3-hour race on foot, barriers will continue to be broken between entrepreneurial ideas and their investors and markets.
What will GEW / Malaysia lead Dash think of next!
[Photo credit: Stuck in Customs]